U.S. Treasury Supplies $33.56 Billion To 21 Banks, Extends Application Deadline

Washington, DC (AHN) - The Treasury Department said on Monday that it supplied $33.56 billion to 21 banks during its second disbursement of bank rescue funds. The Treasury also said it extended the deadline for privately held banks to apply for funds until Dec. 8.

The deadline extension gives roughly 3,800 privately held banks, also know as C-Corporations, the chance to apply for bank rescue funds.

The Treasury said it would not demand preferred stock from some of the small community banks. However, they will put restraints on dividend payments private banks can make.

Participants in the relief program will be allowed to raise dividends by no more than 3 percent per year after a 3 year sting where dividends must remain flat.

Adding in the second round of capital purchases, the rescue plan has now paid $158.56 billion to banks.

The largest payment in the second round of financing was to U.S. Bancorp, which received $6.6 billion. The smallest payment was $9 million to Broadway Financial Corp. of Los Angeles.

The Treasury Department will use the bulk of the $700 billion bank rescue plan to purchase preferred stock in banks that need fresh capital in to help shore up their balances sheets.

Originally, The Treasury planned to use the majority of the rescue fund to purchase distressed mortgage-backed assets from banks to free up their balance sheets. However, last week Treasury Secretary Paulson said that the program would take to long to implement and capital investments would be a more efficient route.